What if there were no companies left to insure people in the ObamaCare exchanges? Would ObamaCare just die on its own and go away? Well, that is starting to look like a real possibility.
In only 3 years, the number of private insurers operating in the exchanges has fallen by more than 27%, from 395 in 2013 to 287 in 2016. How many of those remaining will back out this year before the enrollment period begins in the Fall is anyone's guess. But, the nation's largest insurers, United Healthcare, Aetna, and Humana, have already indicated quitting operations in certain markets. In addition, of the 24 co-op insurance companies that the Obama Administration spent billions to set up, and that were supposed to provide competition in states that lacked adequate competition, only 5 may be left standing before this year's enrollment period begins.
One reason that insurers may start leaving more heavily, is the fact that the 3-year protections against insurance losses like reinsurance and the risk corridors have expired this year. This leaves insurers fully exposed to losses resulting by having to carry an older and sicker enrollment base. With those protections gone, the across the board rate increase requests are expected to be in the double digits.
If the state regulators don't approve these increases because they are seen as too high, some insurers will have no other choice but to back out of some or all of the exchanges they operate in. And, the rate increases will only make insurance less affordable for the younger/healthier crowd that is much needed to reduce losses. Thus, losses will again increase and even more insurers will be forced to leave.
Essentially, ObamaCare seems to be in a death spiral as it becomes more and more evident that any gains made in getting people insured may come to an end and may even be reversed. If this continues, no insurers will be left in the very exchanges that were intended to make ObamaCare affordable.
References:
New Report: Insurers Leaving Obamacare Exchanges in Droves: http://townhall.com/columnists/justinhaskins/2016/04/20/draft-n2151481
The 8 [remaining] Obamacare Co-Ops Most Likely To Fail This Year: http://dailycaller.com/2016/04/10/the-8-obamacare-co-ops-most-likely-to-fail-this-year/
After $300 Million Loss, Another Major Insurer Pulls Out of Obamacare: http://www.weeklystandard.com/after-300-million-loss-another-major-insurer-pulls-out-of-obamacare/article/2003852
As millions get covered, a POLITICO investigation finds that dozens of the insurers that the health care law depends on are losing money and even abandoning the system. Can it be fixed?: http://www.politico.com/agenda/story/2016/07/obamacare-exchanges-states-north-carolina-000162
Double-digit ObamaCare premium hikes projected in 2017: http://www.foxnews.com/politics/2016/06/15/double-digit-obamacare-premium-hikes-projected-in-2017.html
California's Obamacare premium sticker shock: http://www.cbsnews.com/news/whats-behind-californias-obamacare-premium-hike/
Showing posts with label United Healthcare. Show all posts
Showing posts with label United Healthcare. Show all posts
Thursday, August 18, 2016
Wednesday, November 25, 2015
Bad News: ObamaCare May Be Terminally ILL
Just recently, the healthcare insurance giant, United Healthcare announced that it may leave the ObamaCare exchanges at the end of 2016; claiming losses as the reason. Now, ask yourself: If the nation's largest insurer can't operate successfully in the exchanges, then how can smaller companies survive? Well that question can be easily answered by something called the "Risk Corridors" provision of ObamaCare.
Under the Risk Corridors provision, insurers are given protections for extreme losses in the first three years of their operation in the exchanges (2014, 2015, and 2016). What this means is, if an insurer loses 3% in profits, that insurer absorbs those losses completely. However, if those losses exceed 3%, but are less than 8%, the federal government will compensate the insurer for 50% of the losses. If they are greater than 8%, the federal government will cover 80%. Similarly, if an insurer's profits are more than 3% but less than 8%, the insurer must hand over 50% of those profits to the feds. Over 8%, the insurer can only keep 20%.
This year, it was reported by Health and Human Services that, in 2014, the insurers are owed $2.87 billion dollars for losses, while the government is only owed $362 million in excess profits. This is a clear indication that insurance under ObamaCare is a losing proposition. The fact that United Healthcare is complaining about losses so late in 2015, means that the trend of 2014 had continued for United again this year.
A further indication of extreme losses comes from the fact that, of the 23 co-op insurers that were established by the Obama Administration at a cost of $2.5 billion dollars to provide competitive pricing and wider acceptance by doctors, 2 last year and 12 this year have gone belly up, leaving tens of thousands struggling to find new insurers who would include their existing doctors. For example 200 critically ill cancer patients who were being treated at Sloan Kettering, were left with no other insurer who would cover the cost that hospital was charging when their New York co-op went bankrupt.
Lastly, the fact that insurers are struggling to keep above water is reflected by the rate increases they submitted for approval by the state regulatory authorities. In July, the New York Times found that the insurers were asking for increases of between 20 and 40 percent. But, apparently, those increases had been disapproved and set substantially lower. That ls because Health and Human Services only recently announced that rates will only go up an average of 7.5% for next year. That means that the insurers might be exposed to losses of anywhere between 12.5% to 32.5% which will, again, be covered partially by the Risk Corridors provision.
Simply, as ObamaCare goes into open enrollment for 2017 and as the Risk Corridors support ends, there might not be an insurer left to sell in the exchanges. And, if any are left, it will be too expensive for anyone to afford to buy or maintain coverage unless the insurance is heavily subsidized by the federal government. At that point, ObamaCare will just implode.
Of course, you can expect Democrats to keep ObamaCare alive by wanting to extend or expand the Risk Corridors program. After all, you can't just leave millions of people without any further insurance. If that happens, it will just be a matter of time before a single-payer, fully government funded and controlled, health insurance program will come to be. Something the Democrats have wanted from the very beginning.
References:
United Healthcare may pull out of the exchanges: What does this mean for Obamacare?: http://blog.chron.com/intheloop/2015/11/united-healthcare-pulls-out-of-healthcare-exchange-is-this-the-end-of-obamacare/
Risk Corridor Claims By Insurers Far Exceed Contributions (Updated): http://healthaffairs.org/blog/2015/10/01/implementing-health-reform-risk-corridor-claims-by-insurers-far-exceed-contributions/
Even If You Like Your Obamacare Co-Op Insurance, You Probably Can’t Keep It: http://www.govexec.com/management/2015/11/even-if-you-your-obamacare-co-op-insurance-you-probably-cant-keep-it/123719/
Health Insurance Companies Seek Big Rate Increases for 2016: http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html
Obamacare premiums to rise an average of 7.5% for benchmark plan: http://money.cnn.com/2015/10/27/news/economy/obamacare-premiums/
Under the Risk Corridors provision, insurers are given protections for extreme losses in the first three years of their operation in the exchanges (2014, 2015, and 2016). What this means is, if an insurer loses 3% in profits, that insurer absorbs those losses completely. However, if those losses exceed 3%, but are less than 8%, the federal government will compensate the insurer for 50% of the losses. If they are greater than 8%, the federal government will cover 80%. Similarly, if an insurer's profits are more than 3% but less than 8%, the insurer must hand over 50% of those profits to the feds. Over 8%, the insurer can only keep 20%.
This year, it was reported by Health and Human Services that, in 2014, the insurers are owed $2.87 billion dollars for losses, while the government is only owed $362 million in excess profits. This is a clear indication that insurance under ObamaCare is a losing proposition. The fact that United Healthcare is complaining about losses so late in 2015, means that the trend of 2014 had continued for United again this year.
A further indication of extreme losses comes from the fact that, of the 23 co-op insurers that were established by the Obama Administration at a cost of $2.5 billion dollars to provide competitive pricing and wider acceptance by doctors, 2 last year and 12 this year have gone belly up, leaving tens of thousands struggling to find new insurers who would include their existing doctors. For example 200 critically ill cancer patients who were being treated at Sloan Kettering, were left with no other insurer who would cover the cost that hospital was charging when their New York co-op went bankrupt.
Lastly, the fact that insurers are struggling to keep above water is reflected by the rate increases they submitted for approval by the state regulatory authorities. In July, the New York Times found that the insurers were asking for increases of between 20 and 40 percent. But, apparently, those increases had been disapproved and set substantially lower. That ls because Health and Human Services only recently announced that rates will only go up an average of 7.5% for next year. That means that the insurers might be exposed to losses of anywhere between 12.5% to 32.5% which will, again, be covered partially by the Risk Corridors provision.
Simply, as ObamaCare goes into open enrollment for 2017 and as the Risk Corridors support ends, there might not be an insurer left to sell in the exchanges. And, if any are left, it will be too expensive for anyone to afford to buy or maintain coverage unless the insurance is heavily subsidized by the federal government. At that point, ObamaCare will just implode.
Of course, you can expect Democrats to keep ObamaCare alive by wanting to extend or expand the Risk Corridors program. After all, you can't just leave millions of people without any further insurance. If that happens, it will just be a matter of time before a single-payer, fully government funded and controlled, health insurance program will come to be. Something the Democrats have wanted from the very beginning.
References:
United Healthcare may pull out of the exchanges: What does this mean for Obamacare?: http://blog.chron.com/intheloop/2015/11/united-healthcare-pulls-out-of-healthcare-exchange-is-this-the-end-of-obamacare/
Risk Corridor Claims By Insurers Far Exceed Contributions (Updated): http://healthaffairs.org/blog/2015/10/01/implementing-health-reform-risk-corridor-claims-by-insurers-far-exceed-contributions/
Even If You Like Your Obamacare Co-Op Insurance, You Probably Can’t Keep It: http://www.govexec.com/management/2015/11/even-if-you-your-obamacare-co-op-insurance-you-probably-cant-keep-it/123719/
Health Insurance Companies Seek Big Rate Increases for 2016: http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html
Obamacare premiums to rise an average of 7.5% for benchmark plan: http://money.cnn.com/2015/10/27/news/economy/obamacare-premiums/
Subscribe to:
Posts (Atom)
Posts
